The customer always has the right to determine where their payment is allocated at the time of making payment. If they do, it should be allocated in accordance with the customer’s wishes, whatever the circumstances or the debt.

The customer does not have to specify the precise allocation. It may be inferred from the circumstances, for example

they may be paying in accordance with an order of the court, or

write ‘here is a payment against my tax’ where you have negotiated a time to pay arrangement, and you can infer that the intention is to allocate the payment as agreed at the time the arrangement was made.

Where exceptionally you feel the customers allocation would not be in their best interests, for example because a different debt is about to be enforced, you can suggest to the customer that it would be in their interests to allocate differently.

If the customer doesn’t exercise his right to determine where their payment is allocated at the time of payment, we have the right to do so. See DMBM210110 for further information.

Where HMRC choose how the payment is allocated, the payment can be reallocated at the customers request at any point up to when HMRC communicates the allocation of payment to him. However after this point, or once the customer has exercised their right to choose the allocation at the time of payment, both parties are bound by it. See DMBM210120 for information about requests to reallocate payments at a later date.